C. Scope of consolidation

The consolidated Group (see the “Investments” appendix to the Notes) is defined in accordance with IFRS requirements. In addition to the annual financial statements of voestalpine AG, the Consolidated Financial Statements also include the financial statements of entities controlled by voestalpine AG (and its subsidiaries). Entities controlled by voestalpine AG that are not included in the Consolidated Financial Statements of voestalpine AG are negligible, both individually and collectively.

Subsidiaries are entities controlled by the Group. Control exists when the voestalpine Group has power over the investee, is exposed to fluctuating returns on its investment, and has the ability to use its power over the investee to affect the amount of the investor`s returns. The annual financial statements of subsidiaries are included in the Consolidated Financial Statements as of the point in time at which the Group acquires control over the subsidiary up to the point in time at which the Group ceases to exercise control over it.

Associates are entities over which the voestalpine Group has significant influence because it participates in the entities’ financial and operating policy decisions, but the decision-making processes are not controlled nor jointly managed. Joint ventures are joint arrangements in which partner companies (the voestalpine Group and one or more partners) exercise joint control over the arrangement and possess rights to the entity’s net assets. The annual financial statements of associates and joint ventures are included in the Consolidated Financial Statements using the equity method from the acquisition date until the disposal date. The Group’s associates and joint ventures are listed in the “Investments” appendix to the Notes.

Changes in the scope of consolidation

The scope of consolidation changed as follows during the past business year:

The following fully consolidated entities were merged during the business year 2022/23¹:

Due to liquidation, voestalpine Rotec LLC was deconsolidated as of December 31, 2022, and voestalpine Tubulars Al Bassam Company Limited as of the close of the business year.

Discontinued operations

On March 22, 2022, the voestalpine Group’s Supervisory Board approved the decision to sell 80% of the Steel Division’s “Texas” cash generating unit (CGU), which comprises a single plant that produces hot briquetted iron (HBI). The agreement on the sale of the 80% equity interest was signed on April 14, 2022.

In addition, an agreement was made to secure 420,000 tons annually of the HBI produced in the Corpus Christi, Texas, USA, plant for voestalpine. This provides the basis for further decarbonizing the Group’s steel production activities in Linz and Donawitz (both in Austria) as part of the “greentec steel” project. The HBI plant has an annual production capacity of about two million tons.

The criteria regarding the classification of the assets as held for sale were satisfied in the fourth quarter of the business year 2021/22. Management classified the Texas CGU as discontinued operations because it constitutes a separate significant business unit. The transaction was closed on June 30, 2022. voestalpine received the purchase price as of the closing date. The discontinued operations have produced the following results:

The main groups of assets and liabilities related to the discontinued operations at the time of disposal are shown in the following table. In addition, the table shows both the income from the disposal and the net cash inflow.

The purchase price estimate as of March 31, 2022, considered uncertainties regarding the assumption of obligations, the share in profit or loss, and the assumption of debt. These uncertainties were largely substantiated as of March 31, 2023, and are reflected in the disposal result.

The taxable gain on the disposal is offset against existing loss carryforwards.

Transitional consolidation due to the change in the controlling interest

The voestalpine Group no longer controls the subsidiaries of the voestalpine Texas Group. The gain on deconsolidation is recognized in income. It is determined based on the difference between

• the total fair value of the consideration received and the fair value of the remaining equity interest of 20%, for one, and
• the disposed net assets of the discontinued operations including any reclassified (“recycled”) items in other comprehensive income (OCI), for another.

The total of EUR 73.2 million shown in OCI in connection with the voestalpine Texas Group is recognized in the same way an asset sale would be. However, the present case concerns a reclassification of differences from currency translation to the Consolidated Income Statement.

As the voestalpine Group is retaining 20% of its equity interest in the former voestalpine Texas Group, this stake is recognized at the fair value of EUR 134.4 million as determined at the time control was relinquished. This value represents the cost of the equity interest, which is subsequently valued using the equity method in accordance with the rules applicable to associates.

The fair value of the 20% stake was derived from the purchase price for the 80% equity interest and represents a Level 3 fair value. Given the Group’s limited control and co-determination rights under its 20% equity interest, a deduction that was determined on the basis of transaction data was taken.